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The Report: Morocco 2019

A number of key developments in the country are expected to support economic growth in the coming years. A rapidly improving business environment and infrastructural base, the gradual liberalisation of the local currency and increased investment into export-oriented industries are all set to raise living standards and drive the emergence of a large national middle class.

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Sections

  • Country Profile
  • Economy
  • Banking
  • Capital Markets
  • Insurance
  • Industry & Retail
  • Energy
  • Transport & Logistics
  • Construction & Real Estate
  • Fez-Meknes
  • ICT
  • Tourism
  • Agriculture
  • Health
  • Education
  • Tax & Accountancy
  • Legal Framework
  • The Guide
  • Table of Contents

Country Profile

Morocco is the 25th-largest country in Africa and has a geographic area of 446,550 sq km. The country’s political capital is Rabat, but the largest city by far, as well as the business and economic capital, is Casablanca, located 85 km from Rabat. The current king, Mohammed VI, came to power in 1999. The country has seen substantial socio-economic changes during the current king’s reign, including many notable improvements in socio-economic indicators, though challenges remain. GDP per capita, in constant prices and purchasing power parity terms, has risen by more than two-thirds over the period. The king has called for improvements in education and training provision, as well as greater efforts to secure jobs for young Moroccans. These calls have been reflected in recent policy changes, among them an increase in education spending in the 2019 budget, and plans to overhaul the professional and vocational training system. This chapter contains a viewpoint with King Mohamed VI; interviews with Akinwumi Adesina, President, African Development Bank; Simon McDonald, Permanent Under-Secretary, Foreign and Commonwealth Office of the UK; and Mohcine Jazouli, Minister Delegate for African Cooperation, Ministry of Foreign Affairs.

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Economy

While 2018 marked a deceleration from the economic growth of 2017, Morocco’s overall picture continues to look stable: the IMF forecast GDP growth of 3.2% for 2018, a substantial figure, and projected growth of 3.2% for 2019. A number of key developments are expected to support economic growth in coming years. A rapidly improving business environment and infrastructural base, the gradual liberalisation of the local currency, and increased investment into export-oriented industries are all set to raise living standards and drive the emergence of a large national middle class. Broader growth is not without its challenges, however, and officials are likely to put more effort into overcoming entrenched socio-economic problems and stubborn unemployment. Still, the medium-term upward trajectory of the nations’ GDP also appears to be holding steady, which will bring added help in tackling such issues. This chapter contains interviews with Mohamed Benchaâboun, Minister of Economy and Finance; Moulay Hafid Elalamy, Minister of Industry, Investment, Trade and Digital Economy; Salaheddine Mezouar, President, General Confederation of Moroccan Enterprises; and Said Ibrahimi, CEO, Casablanca Finance City Authority.

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Banking

In hand with sustained economic growth in recent decades, Morocco has been able to establish one of the region’s most competitive and sophisticated banking sectors. This has translated into significant penetration levels for banking services, a wide array of products and a handful of large-scale banking players with international reach across the continent. Despite the years of development, however, the sector has had to contend with slower rates of lending and a lukewarm economic context of late. This has led to some strategy realignment, both by the country’s lenders as well as by the monetary authorities, who are keen to maintain the industry’s role as a dynamic factor in the kingdom’s economy. This chapter contains interviews with Abdellatif Jouahri, Governor, Bank Al Maghrib; and Ismail Douiri, General Manager, Attijariwafa Bank.

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Capital Markets

Economic progress and the country’s natural position as an investment bridge between Europe and Africa have allowed Morocco to establish one of the continent’s largest and most sophisticated capital markets. Despite its advantages, however, the Casablanca Stock Exchange has been affected by low levels of liquidity, a scarcity of new listings and an overall lukewarm performance. One significant difficulty has been the bourse’s inability to attract new firms and spur the interest of a large volume of individual investors. Still, the government’s new roadmap is likely to positively impact the stock exchange over the medium term by helping improve offerings and boost demand. Government plans to list certain public companies and attract private investors is also expected to improve performance. This chapter contains interviews with Nezha Hayat, Chairperson, Moroccan Capital Markets Authority; Karim Hajji, General Manager, Casablanca Stock Exchange; and Younes Benjelloun, Partner and CEO, CFG Bank.

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Insurance

Building on several years of sustained growth, Morocco’s insurance sector is implementing a series of significant reforms that appear set to boost future expansion. New rules have changed key aspects of insurance distribution and established a range of new compulsory products that are set to boost the overall issuance of premiums. In addition, these reforms are expected to expand the country’s product offering, including the creation of a takaful (Islamic insurance) segment. Morocco already has one of the best-developed insurance markets in the region and these changes – bolstered by an increase in competition in the life insurance segment – should help to support sustained sectoral performance over the medium and long term. This chapter contains interviews with Hassan Boubrik, President, Supervisory Authority of Insurance and Social Welfare; and Coenraad Vrolijk, Regional CEO, Allianz Africa.

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Industry & Retail

Between 1985 and 2016 industry contributed an average of about 19% to GDP, and in 2017 this increased, raising the sector’s contribution to around 25% of GDP. The country’s industrial offering is diverse and includes products in the automotive, electronics, textile, offshoring, pharmaceuticals, aerospace, chemicals and electronics segments. The sector will continue to play an integral role in Morocco’s economy and is set grow an additional 5% by 2022. However, it must first diversify its offering, which could include further shifting to high value-added manufacturing such as aerospace or automotive, and increasing overall exports. The kingdom also has plans to leverage its textile industrial capabilities to become a global sourcing centre for fast fashion and denim. The retail sector in Morocco is expected to continue to grow due to demographic shifts. In addition, higher internet penetration rates and the increasing popularity of online shopping are all levers for sector growth. This chapter contains interviews with Othman El Ferdaous, Secretary of State for Investment, Ministry of Industry, Investment, Trade and Digital Economy; Jean Christophe Quemard, Executive Vice-President for the MENA region, Groupe PSA; Farid Bensaïd, CEO, Ténor Group and President, National Federation of Insurance Agents and Brokers; and Abdellatif Kabbaj, Managing Director, Soft Group.

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Energy

Lacking the hydrocarbons reserves of some of its neighbours, Morocco has had to rely on imports of fossil fuels to develop its economy. This has left the country exposed to fluctuations in global energy prices and has impacted the kingdom’s budgetary position. However, the country has taken measures to reduce dependence on energy imports. Over the last several years the kingdom has been able to develop know-how in the renewable sector, expand its clean energy production capacity, and establish a new industry that is helping to attract investment and create jobs. All this has helped to inject dynamism into the kingdom’s energy sector, and this momentum is likely to continue over the coming years. In order to be able to build on these achievements, however, the sector authorities will need to step up regulatory efforts to properly define market conditions. This chapter contains an interview with Bertrand Piccard, Founder and President, Solar Impulse Foundation, and UN Ambassador.

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Transport & Logistics

Large public investment in Morocco’s physical infrastructure in recent years has contributed to the expansion of domestic transport and logistics. The construction of 1800 km of new expressways, expansion of the rail network, and development of logistics and industrial zones has led to a sharp increase in the number of active companies in transport and logistics. Currently, the sector directly contributes €3.6bn, or 4%, to the country’s GDP, and provides jobs to some 1m people. However, in order to secure growth going forward, more needs to be done to facilitate private investment, which remains low. Although the number of projects under way indicates that the kingdom’s transport sector will see strong growth over the coming years, there are various issues which could potentially impact its performance. This chapter contains an interview with Hartmut Goeritz, CEO, APM Terminals Tangier.

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Construction & Real Estate

Growth in the construction sector is principally influenced by government investment and the implementation of infrastructure, energy and residential housing projects. Indeed, about 80% of turnover from the sector comes from public projects. After delays in public infrastructure projects in 2017, 2019 is looking bright for public investment in mega-projects. Meanwhile, the slew of foreign investment in the real estate sector in 2018 signals the high level of international confidence in the market, which is expected to remain strong in the years to come. Promising segments are luxury real estate and retail. To ensure inclusive growth within the sector, the government will continue to carry out its social housing programme through to 2020. This, together with increased private sector participation and the construction of middle-income units, is set to help curb the lodging deficit that has challenged the country for many years. This chapter contains an interview with Karim Beqqali, CEO, Yamed Capital.

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Fez-Meknes

Boasting a dynamic and diversified economy, the Fez-Meknes region contributed 9.4% to Morocco’s national GDP in 2018, fourth by economic output. Established in 2015 as one of 12 distinct administrative areas, Fez-Meknes covers an area of over 40,000 sq km and forms a crossroads between several prominent economic centres on the country’s coasts. The region, one of the country’s largest by population, output and consumption, has accordingly launched many projects to lift growth. It has identified the shortcomings it must tackle, as well as its existing strengths and those economic sectors with the most potential to add value to local economic activity. The region must address urban unemployment, rural poverty, illiteracy among women and economic precarity. It already has the resources to foster job creation, lift wages and build wealth, including fertile land, a rich cultural heritage and cities equipped with extensive industrial capacities. This chapter contains an interview with Rachid Aouine, Director, Regional Investment Centre of Fez-Meknes.

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ICT

Economic growth, coupled with the liberalisation of the sector in the 1990s, has led to the expansion of Morocco’s ICT sector, which is also underpinned by high penetration levels, as well as policies conducive to the development of related services and their incorporation into everyday business activities. Meanwhile, a focus on e-government and the digitisation of the economy – along with improvements to mobile data services, which are playing an ever-greater role – are likely to lead to continuing positive performance. The mobile telecoms segment is the most dynamic in the industry, with mobile data services leading the way. Although it still lags behind telecoms in terms of dynamism, the IT sector will likely benefit from the implementation of the government’s Digital Morocco Plan 2020. By establishing a dedicated agency for IT development, Moroccan authorities have underlined the importance for the country’s future development of transitioning to a digital economy. However, for the strategy to succeed, efforts to bridge the digital divide and increase penetration must be kept on track. This chapter contains interviews with Saloua Karkri-Belkeziz, President, Federation of Information Technologies, Telecommunications and Offshoring, and President, Gfi Africa; and Mehdi Alaoui, Founder and CEO, LaFactory, and Vice-president, Moroccan Federation of IT, Telecommunications and Offshoring.

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Tourism

Morocco is amongst the best-developed tourism markets in Africa, benefitting from its close proximity to Europe, a wide variety of landscapes and attractions, year-round warm weather in parts of the country, and a more stable political and security environment than some of its regional competitors. The years since 2016 have seen healthy rises in tourism arrivals, though over the longer term growth has failed to meet the authorities’ targets, prompting work that is currently under way to revise the national strategy for the sector’s development. New transport infrastructure such as the high-speed train line linking Casablanca to Tangier launched in late 2018, and the development of new hotels in the high-end segment highlight the confidence in the sector felt by private developers and the government. Moreover, growth in local tourism and rising numbers of visitors from emerging source markets further underscores the broadly positive outlook and potential of the industry. This chapter contains interviews with Mohammed Sajid, Minister of Tourism, Air Transport, Crafts and Social Economy; and Laila Mechbal, CEO, Air Arabia Maroc.

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Agriculture

The agriculture sector remains the main driver of economic growth, contributing 19% to GDP. The Green Morocco Plan, which was launched in 2008 and runs until 2020, is the national agricultural policy. The plan is responsible for generating sector growth as well as preparing for future challenges, such as food security, climate change and an increasingly competitive global market. Although the sector has seen positive performances in the 2018/19 season, there is still room for growth. There are two years left to complete the objectives of the plan, and further financing will be required to achieve these. Moreover, Morocco will need to position itself strategically to be able to endure the impact of climate change and unpredictable weather conditions, and ensure the agriculture sector’s resilience and continued growth, as well as the country’s food security. This chapter contains an interview Mohammed Fikrat, President, National Federation of Agribusiness, and CEO, Cosumar.

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Health

Moroccan health indicators have improved steadily in recent years, although there remains room for improvement, even by regional standards. In addition, as in many countries, the burden of lifestyle-related non-communicable diseases is on the rise. Access to health care coverage has also been growing rapidly as the authorities roll out government-backed insurance schemes to an ever-growing number of citizens, with the country aiming to achieve near-universal coverage in the coming years. Meanwhile, recent regulatory changes have opened up the private sector to increased investment, and the public sector has been gaining ground on the former in terms of its level of spending. This chapter contains an interview with Mohamed Elmandjra, CEO, Oncologie et Diagnostic du Maroc.

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Education

Basic education indicators such as school attendance and literacy rates are rising in Morocco, particularly for higher education, where attendance has rapidly accelerated in recent times and is set to rise further as the government expands eligibility. The authorities are stepping up investment in the sector, with plans in the works for increased spending, better infrastructure and the establishment of universal preschool. However, the sector continues to face a range of challenges, including student retention and teaching quality. Building on long-term advances in basic sector indicators such as near-universal youth literacy, education outcomes and the quality of provision appear set for further improvement due to a renewed focus on teacher recruitment and training, rising rates of secondary school and university attendance, and the promotion of preschool. The uptake of private education also appears likely to continue along its current growth trajectory, as the kingdom’s economy expands and income levels rise. This chapter contains an interview with Ahmed Benyahia, CEO, Holding Générale de l’Education.

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Tax & Accountancy

Written in conjunction with Ernst & Young, this chapter explores the taxation system and Morroco’s efforts to build an investor-friendly environment. It also contains an interview with Abdelmejid Faiz, Tax Partner, EY Maroc.

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Legal Framework

Written in partnership with Sayarh & Menjra Law Firm, this chapter introduces the reader to the different aspects of the legal system in Morocco. It also contains a viewpoint with Mehdi Megzari and Omar Sayarh, Partner and Managing Partner, Sayarh & Menjra Law Firm.

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The Guide

This section includes information on hotels, government offices and other listings, alongside useful tips for visitors on topics like currency, visas, language, communications, dress code, business hours and electricity.

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Table of Contents

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